Vinco Ventures (NASDAQ:BBIG) stock is trading erratically today after the company issued distributions to shareholders from its Cryptyde (NASDAQ:TYDE) spinoff, and as prices for Bitcoin (BTC-USD) and other cryptocurrencies continue to fall.
Vinco Ventures, which is a holding company, has spun off Cryptyde, its unit that is focused on Bitcoin mining, Web 3.0, and non-fungible tokens (NFTs). Investors had been eagerly awaiting the spinoff, which they see as helping to strengthen Vinco Ventures’ balance sheet. However, news that the price of Bitcoin has fallen below the key support level of $20,000 and that multiple cryptocurrency firms are facing a liquidity crisis has BBIG shares moving erratically today. Premarket, Vinco Ventures stock was down 20%. BBIG stock rebounded once trading for the day began and rose 10% just to fall again. It sits about 6% down at $1.24 at the time of writing.
Today Cryptyde has begun trading on the Nasdaq exchange under the ticker symbol “TYDE.” Under the company’s distribution plan, Vinco Venture shareholders get one TYDE share for every 10 BBIG shares they own. While the distribution is seemingly positive news, the market debut of Cryptyde and the distribution of its shares comes at a crisis moment for the cryptocurrency sector as prices continue to fall and companies layoff staff or close up shop.
Bitcoin, the world’s largest digital coin has seen its price fall 58% this year and is down more than 70% from an all-time high of $68,000 reached last November. Earlier this week, it was announced that Singapore-based cryptocurrency hedge fund Three Arrows Capital is being liquidated after defaulting on more than $650 million of loans. Last week, cryptocurrency exchange CoinFlex halted all withdrawals for customers due to what it called “extreme market conditions.”
Several “stablecoins” that are supposed to be pegged to the U.S. dollar have also failed or come under pressure in recent weeks. TerraUSD, an algorithmic stablecoin, and its sister token Luna collapsed recently, sending shocks through the entire cryptocurrency market.
Why It Matters
BBIG stock appears to be caught in the vortex of the cryptocurrency selloff. Investors appear to be struggling to figure out how the current rout in the cryptocurrency market will impact Cryptyde, and, ultimately, Vinco Ventures. This helps to explain why BBIG stock is experiencing such wide swings today. At the same time, talk of a potential ban of video sharing site TikTok in the U.S. is a potentially positive catalyst for Vinco Ventures, which operates the rival video sharing app Lomotif.
It should also be noted that Vinco Ventures has been treated as a meme stock in the past, with retail traders on several occasions executing a short squeeze on the shares. Last September, BBIG stock jumped to $12.49 from $2.50 in only a few days. But despite those short squeezes, Vinco Ventures stock is down 50% year-to-date and has declined 67% over the past 12 months.
What’s Next for BBIG Stock
There’s certainly a lot of news for shareholders to digest with BBIG stock. The timing of the Cryptyde spinoff appears to be difficult coming as it does amid a major downturn in the entire cryptocurrency sector. A potential ban on TikTok stateside though could give a boost to Vinco Ventures’ Lomotif video sharing site. Or retail traders could be gearing up to squeeze the stock again.
How it all plays out should be decided in coming days. But given the current volatility in the share price, investors might want to proceed carefully with Vinco Ventures stock.
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On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.